US grain exports are boosting demand for barge and rail transportation

The latest USDA Agricultural Marketing Service Grain Transportation Report reveals a substantial increase in grain exports, leading to heightened demand for transportation services, particularly in barge and rail sectors.

The report, covering the 2024/25 marketing year through December 5, shows that year-to-date accumulated grain exports have risen by 26 percent compared to the same period last year. This surge is primarily attributed to increased corn and wheat exports, with corn exports projected to be the largest since the 2021/22 marketing year.

The impact on transportation has been notable, especially for barge movements. From September 7 to December 7, barge movements through the Mississippi River locks increased by 13 percent each for corn and soybeans compared to the previous marketing year. Wheat movements saw an even more significant jump, rising 11 percent from June 1 to December 7. This increased demand has led to elevated barge rates, reflecting the growing pressure on river transportation infrastructure.

Rail transportation has also seen changes, particularly in wheat shipments to Mexico. Inspections of wheat transported by rail to Mexico increased by 22 percent from September 1 to December 5. However, corn shipments by rail to Mexico faced challenges, decreasing by 2 percent despite increased exports. This decline is attributed to ongoing service issues on the Mexican railroad, Ferromex, and temporary suspensions of permits for grain shuttle trains by major U.S. railroads.

The report highlights that these rail challenges may have diverted some shipments to ocean transportation, which saw a 61 percent increase in volume from September 1 through November 30.

Looking ahead, the demand for grain transportation is expected to remain strong. Factors influencing future transportation needs include rising use of soybeans for biodiesel production, which is likely to increase exports of soybean meal and oil, as well as stable domestic demand for ethanol-gasoline blends and strong foreign demand for U.S. ethanol.

This surge in grain exports and the resulting impact on transportation underscores the critical role of efficient logistics in supporting U.S. agricultural trade. It also highlights the need for continued investment in transportation infrastructure to meet the growing demands of the grain export market.